Site Search Navigation

Search NYTimes.com

Loading...

See next articles

See previous articles

Site Navigation

Site Mobile Navigation

Supported by

Invisible Cavalry To The Rescue!

August 27, 2010 2:12 pmAugust 27, 2010 2:12 pm

I’ve written a lot about the invisible bond vigilantes who have terrorized policy makers, even though there’s no actual evidence for
their existence. But after Ben Bernanke’s speech this morning, it seems to be that I should also start writing about the invisible
cavalry, which is always about to come to our rescue, but somehow never arrives.

Bernanke more or less admitted that the economic situation has developed not necessarily to America’s advantage, nothing like the growth he was predicting six months ago.
But he argued that 2011 will be better, because … well, it was hard to see exactly why. He offered no major drivers of growth, just a general argument that businesses will invest more despite huge excess
capacity, and consumers spend more despite still-huge debts and home prices that are likely to resume their decline.

Oh, and sure enough, he declared that inflation expectations are well-anchored, although the market says otherwise.

So: I guess this speech marked a small step toward QE2 and all that. But mainly the message was that just around the corner, there’s a rainbow in the sky.

So I’m going to have another cup of coffee, but skip the pie (in the sky).